AMO President's Remarks at 2017 OSUM Conference

Remarks by AMO President Lynn Dollin
2017 OSUM Conference
Village Conference Centre at the Blue Mountain Resort
Town of the Blue Mountains
Thursday, May 4, 2017
2:15 p.m.

(Check Against Delivery)

Good afternoon!

I have been AMO President for about eight months now. It has been an incredible experience so far. I’ve spent a lot of time at Queen’s Park – trying to move the yardstick on legislation that matters to us and to represent municipal needs as part of our budget input.

Coming from Innisfil, I can tell you I’ve always found the OSUM conference to be a useful opportunity to connect with peers in the small urban community. I see a host of shared challenges on your agenda – from new accountability measures to energy and economic development. As AMO President, I can tell you that these matters are top of mind right across the province.

AMO is pleased to be here, to talk about how we are working, on your behalf, to advance the priority and common interests of our membership – which is almost all of Ontario’s 444 municipal governments.

That may sound like a tall order. But the truth is that there is quite a bit we can agree on. And much more that unites us.

AMO is governed by a 43-member board with membership from across the province and from municipal governments of all shapes and sizes – small and large, urban and rural. I want to take a moment and acknowledge the hard work of your reps on the Small Urban Caucus:

Chair Jamie McGarvey of Parry Sound

Gail Ardiel, of our host community of the Blue Mountains

Jim Collard of Niagara on the Lake

Robert Foster of Lincoln

Larry McCabe of Goderich

Graydon Smith of Bracebridge

They are all valued members of the AMO Board.

For the past two years, AMO’s focus is more than just immediate policy issues – of which there are many. But given my time today, I am going to focus on a more long-term strategy - AMO’s efforts to secure the financial future of all Ontario’s municipal governments.

Our policy staff did a deep dive into municipal government numbers. They are alarming in terms of growing costs and limited revenues. Infrastructure across the province is in dire need of repair. You know all too well the continued struggle to get infrastructure funding.

The only truly predictable infrastructure funding for you comes from three sources. First, the 50% formula portion of the Ontario Community Infrastructure Fund. Second is the permanent federal gas tax fund. And finally, for a few of you with a qualifying transit system, the provincial transit fund.

Let me be clear – these are important because they are real money and are predictable. But I think we can agree they don’t go far enough.

So two years ago, we started on a journey with our membership – to understand the problem going forward and to find possible solutions. We called it “What’s Next Ontario.”

It was AMO’s most ambitious member engagement in recent times. AMO consulted far and wide with local leaders across Ontario. We went on the road and met with elected officials and staff at more than 40 meetings across the entire province and through webinars. I know many of you took the time to discuss the issues and options. Thank you for taking part.

It confirmed that there is a great deal of agreement on the challenges that we all face. Those challenges might look different in different communities – whether you are growing quickly, or have stable or negative growth. Each is fiscally challenged. In one way or another, every community faces some version of the same test – providing for the future.

AMO’s analysis found that as a whole, Ontario municipal governments face a $4.9 billion shortfall every year for the next 10 years – and that is simply to maintain current services and address the gap in infrastructure spending.

To reiterate – this is to maintain current levels of service with no service expansion and no new mandates from the provincial or federal governments.
The $4.9 billion shortfall assumes that property taxes and user fees will increase by the rate of inflation, and that the province and federal government will maintain all of their current commitments into the future.

There are really only a few ways to deal with the problem. We can either:

cut costs,

cut services,

find new revenues, or

deliver some combination of these things.

We have limited room to cut costs, because many costs are simply beyond our control. Things like hydro rates – they are hitting us just as hard as they have been hitting our residents.

Municipal operating costs are going up about a billion dollars every year province wide – to put that in some context – that’s almost $3 million every day.

So we’ve been advising the Ontario Government on ways to help us reduce costs – and we are frustrated again in the lack of action on these issues.

So far, the Province has failed to intervene on matters that could save us millions, and wouldn’t cost them a dime:

I’m talking about reform to joint and several liability;

And interest arbitration – let me remind you that the current system cost municipal governments about $485 million over five years;

And efforts to modernize policing to make it more effective and efficient – the discussions to try to lower the ever increasing trajectory of costs while providing for public safety have gone on for years;

Or on the Blue Box. Industry stewards always under-pay their share – and provincial policy lets them get away with it, year after year.

In fact, rather than helping us cut costs, provincial actions often drive them up – like a mandatory integrity commissioner as proposed in Bill 68. Or new costs for WSIB presumptive cancers and post-traumatic benefits for first responders. This budget also included reference to expanded benefits for work-related chronic mental stress.

The aim of these policies may be worthy, but the costs that we must bear need to be acknowledged. New responsibilities must come with new funding sources.

So then, do we cut services?

There isn’t much public appetite for that.

In fact, a comfortable majority – about two-thirds of people, according to recent Nanos polling for AMO, were opposed to cutting municipal services to freeze property taxes.

The reality is that we face factors such as an aging society, more extreme weather events and changing economic base. These will require more, not less, services in the future. More seniors services, more emergency services, more public works, better broadband, more access to natural gas, and so on.

Then there is the infrastructure gap.

Municipal governments own two-thirds of all public infrastructure – that’s everything from roads and bridges, to storm water-to-water and waste systems, fire halls and community centres.

These things are the very foundations of our lives – getting us to and from work, shipping products, keeping us healthy and safe, gathering us together for a sense of community.

We have made good progress. The upload of some social services meant those dollars were diverted back to infrastructure investments. There have also been infrastructure programs from the other governments.

Yet there is so much more work to do.

And there aren’t reliable funding sources to do it. Bracebridge, for example is trying to replace a 70-year-old arena. They have a 100-year-old Carnegie library that’s also the focus of community concern. How do you build a community, attract jobs and economic growth if you don’t have these basic things? They contribute to a good quality of life. Most communities have a “social infrastructure” need too – not just pipes and pavements.

Across Ontario, infrastructure is under pressure – rather I should say, remains under pressure!

Asset management plans are proving it across the province.

In small urban communities, it’s about both meeting basic community needs and investing in infrastructure to support economic development.

Raise your hand if you’ve had a successful funding application in the past two years. ... Raise your hand if you’ve applied and been denied. …

Right across the province, basic projects are denied funding repeatedly – these are for roads work and sewer line repairs.

Property taxes would have to nearly double in the next decade to make up the fiscal gap.

That is sobering. You and I likely agree that property taxes can’t do the job alone.

Ontarians agreed. About 76% said they are concerned that current local property taxes will not cover the cost for future infrastructure needs.

The limits of the property tax are clear. We so often see assessment appeals that force more of the burden onto our residential taxpayers.

Goderich boasts one of the largest salt mines anywhere, and production is booming. But it received reduced assessment. It was part of a bigger “one-size fits all” deal that didn’t look at local circumstances.

There are big box retailers that appeal their assessments every time, and across the province. It’s frustrating. These Canadian retailers wrap themselves in the flag and kids hockey, but who’s going to pay for that arena if they don’t at least do their fair share?

The resident, that’s who.

With a small industrial and commercial tax base already, it forces more of the burden on to residential taxpayers. It’s not unusual for residential to carry more than 80% of the property tax load.

Everyone who uses municipal services should help pay for them – that includes the many visitors and tourists to your picturesque communities.

Then there’s the impact on seniors and people with fixed incomes. Property taxes don’t reflect what a person can afford.

Practically speaking, if we can’t reduce the cost of municipal government significantly ... and we can’t reduce services ... then we are going to have to increase revenue for municipal government.

Ontario’s budget included a transient accommodation, aka “hotel” tax option, for single and lower-tier municipalities. Other tax help in the budget included modest improvements to railway taxes, a vague reference to improve tax equity related to the northern provincial land tax and the previously announced vacant property tax.

I can tell you that, while any help is appreciated, none of these measures will go any real distance. Through our cross province consultations, we discussed more than 40 different revenue tools to find a way that could fit communities with so many varied needs.

We polled Ontarians on seven different new funding tools for municipal governments – from land transfer taxes to income taxes and the sales tax. We actually found some hope – and maybe even an appetite for change. For example, support for a new 1% on the HST dedicated to municipal infrastructure, was high – about 60% across Ontario. A new fuel tax or tolling were low.

Ten years ago, after a concerted municipal campaign, the Province agreed to slowly take back the social service and court costs it had downloaded on to us in the 1990s. We’ve got a good track record and we’ve shown that when the Province does their share, we do ours.

In 2018, the 10-year phase-in of the upload will have been achieved. It makes sense to look towards what’s next.

Almost one year ago, Premier Wynne said that modern municipal governments need 21st century revenue tools. At the AMO Conference, she called on AMO to find municipal consensus on a solution.

We are rising to that challenge. AMO has been working with what we’ve learned across Ontario. I can tell you that there is strong consensus that the status quo isn’t the path forward. Being at the bottom of the government fiscal food chain, being so reliant on other orders of government, isn’t the path for our success. The public seems to understand this too.

Looking ahead, Ontario's commitment to partnership needs to include a commitment to ensure that both orders of government are making ends meet. The Ontario government and municipal governments have a shared responsibility to ensure that basic public services are properly funded and affordable.

Municipal governments are at a crossroads. In the coming weeks, AMO will be framing out and sharing what a path forward could look like. Please pay attention.

While I can’t share the details today, I can tell you how important it is going to be to show solidarity and present a strong, united front to all the political parties. They need to care as much as we do – and in a meaningful way.

Our communities are quite different. Dare I say that even within this group, political stripes are likely different.

It’s easy to exploit our differences. But, and it is an important but - we are very hard to ignore when we work together towards a common goal.

So in the days ahead, I am looking forward to working with all of you, as we seek that path to building successful, healthy and safe communities. Ontario’s municipal governments, as the front line order of government, deserve the means to provide for your communities and deliver a brighter future.